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Ahold Sells Stake in Central American Joint Venture to Wal-Mart

ZAANDAM, Netherlands and BENTONVILLE, Ark. -- Ahold has sold its indirectly owned stake of 33.3 percent in the Central American Retail Holding Co. N.V. (CARHCO) joint venture to Wal-Mart Stores, Inc., the two companies said. The investment is Wal-Mart's first in the region. The transaction amount wasn't disclosed by either party.

CARHCO has an 85.6 percent stake in La Fragua S.A., a Guatemala-based discount store, supermarket, and hypermarket company that also has operations in El Salvador and Honduras. Additionally, CARHCO fully owns Corporación de Supermercados Unidos S.A. (CSU), a discount store, supermarket, and hypermarket operator in Costa Rica, Nicaragua, and Honduras.

In turn, CSU fully owns Corporación de Compañias Agroindustriales, S.A., a company that sources all of the fresh products for CSU and La Fragua and that also develops private label items. As of last month, CARHCO operated 120 stores in Guatemala, 57 in El Salvador, 32 in Honduras, 124 in Costa Rica, and 30 in Nicaragua.

Acknowledging that the alliance had been discussed for several years, Wal-Mart International president and c.e.o. John Menzer said, "We are joining a strong partnership that is delivering outstanding service to customers throughout the region. We believe our investment will add strength to the partnership by helping to keep prices low for consumers and will offer new opportunities to suppliers in the region for additional business development."

Menzer added that Wal-Mart's plans for the region in future years included new stores; improved services; the addition of high-quality, innovative products; and lower prices.

The agreement stipulates that Wal-Mart will acquire additional interests over time in CARHCO, including interests toward gaining majority ownership in the company.

Customized training programs are in the works for CARHCO associates and suppliers, to help them with career and business development. "A consolidated network of Central American supermarkets will have vast potential for product commercialization and regional economic development," Wal-Mart said.

Central America is already a major source of apparel for Wal-Mart, which directly imports over $350 million in goods from Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica. Further, the company buys goods from many suppliers with farms and factories in the region.

Noted CARHCO president Rodrigo Uribe: "This alliance. . .represents a very significant achievement in the attraction of foreign investment to the region, which will allow us to improve our services and generate more jobs. Undoubtedly, this alliance will allow us to reach levels of excellence in operations and customer service of more developed markets for the benefit of the Central American consumers."

UBS Investment Bank and Dresdner Kleinwort Wasserstein acted as financial advisors to Wal-Mart in the transaction. Credit Suisse First Boston acted as financial advisors to the Central American partners of CARHCO.

According to Ahold, the divestment of its stake in CARHCO "is part of the company's strategy to optimize its portfolio and to strengthen its financial position by reducing net debt."
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